HomeMy WebLinkAboutAgenda Report - August 6, 2008 K-04AGENDA ITEM fNw
CITY OF LODI
COUNCIL COMMUNICATION
fM
AGENDA TITLE: Adopt Resolution Authorizing City Manager to Execute Master Agreement
and Task Order No.1 of Water Utility Financial Planning, Rate Setting and
Meter Installation Program to The Reed Group, Inc., of Sacramento
($114,670) and Appropriating Funds ($125,000)
MEETING DATE: August 6, 2008
PREPARED BY: Public Works Director
RECOMMENDED ACTION: Adopt a resolution authorizing the City Manager to execute a Master
Agreement and Task Order No. 1 of the Water Utility Financial
Planning, Rate Setting and Meter Installation Program to The Reed
Group, Inc., of Sacramento, in the amount of $114,670 and
appropriating funds ($125,000) as shown below.
BACKGROUND INFORMATION: At the May 2, 2007 City Council meeting, information was provided
regarding the Water Meter Retrofit Program mandated by Assembly
Bill 2572. Specific topics of discussion included historical
background, water use, rate structure, rates and conservation,
meter costs, an accelerated program for meter installation, and policy issues. A summary of background
milestones relative to the City's water meter retrofit program is provided below.
1. 1979 Lodi started installing water services "meter ready"
2. 1980's Lodi started meter retrofit program that was terminated in 1993
3. 1992 State law mandated meters on new services
4. 2004 State law requires usage -based residential billing begin by January 1, 2010 for customers
with water meters
5. 2006 Water meter installation pilot project (400 meters)
6. 2007 — 08 Water meter installations completed for new homes constructed since 1992 (2,472
meters)
At this time, staff is recommending the services of The Reed Company and the public relations firm
subconsultant, The Lucy Company, be retained to facilitate introduction of a usage -based water rate.
Assistance is required in order to meet the January 1, 2010 deadline to charge, based upon usage, the
2,472 customers that purchased water meters since 1992. These two companies have successfully
partnered in many communities including West Sacramento, Roseville, and Granite Bay to provide
financial planning, rate setting, water meter implementation programming, education and community
outreach. The principal objectives of this effort will focus upon:
1. Developing a multi-yearfinancial planning model capable of evaluating a variety of scenarios and
financial strategies. The model will examine the financial aspects of usage -based rate setting,
APPROVED
BI � i , City Manager
K;IWPIUTILITY RATE5IW_WWICWaterCAi ityFinandngPlan.doc
7110120flB
Adopt Resolution Authorizing City Managerto Execute MasterAgreement and Task Order No. 1 of Water
Utility Financial Planning, Rate Setting and Meter Installation Program to The Reed Group, Inc., of
Sacramento ($114,670) and Appropriating Funds ($125,000)
August 6,2008
Page 2
water meter retrofit program, PCE/TCE cleanup efforts, construction of a new water treatment
plant, water system capital improvementsand debt service.
2. Developing a metered rate structure and a transition strategy to implement metered rates
3. Developing and implementing a public outreach and education program to inform customers
about the metering requirements, installation of meters and transition to metered rates.
During the nine- to twelvemonth period of this contract, there will be a number of policy issues the
City Council will be asked to address. Most of these same issues have been addressed in the
communities this consultant team has previously served. Some examples are listed below.
1. Customers that have received a meter -ready box through the infrastructure replacement program
or otherwise from the City — Are these customers required to reimburse those costs to the City
and, if so, how much and over what timeframe?
2. Nearly 11,000 customers will require new metered services —Are these customers required to
pay the cost upfront or over what timeframe?
3. For a period of time, some Lodi customers will be on flat rate billing and others will be on a
usage -based billing — How long a period is acceptable to the City Council and what are the
financial implications?
4. The deadline of January 1, 2010 does not leave much opportunityto send comparative billing
information (flat rate versus usage -based rate) — How important is that to the City Council and
how many months of comparative rate information are needed?
As mentioned, a variety of scenarios and financing strategieswill be analyzed using the planning model.
The results are planned to be presented to City Council in November 2008.
FISCAL IMPACT: The model will enable a detailed analysis of current and future water rates
to ensure that operations and capital expenditures are balanced to the
revenues.
FUNDING AVAILABLE: Req
FWS/pmf
Attachment
riation: $125,000 —Water Capital (182000)
Budget Manager
'4101"', J'eh_'040.
F. Wally SWidelin
PublicWorks Director
KAWRUTTiLITY RATESIW_WW1GWaterUtilityFinancingPlan.doc 711012008
TASK ORDER AGREEMENT FOR PROFESSIONAL SERVICES
BETWEEN THE CITY OF LODI
AND
THE REED GROUP, INC.
THIS TASK ORDER AGREEMENT, hereinafter referred to as "Agreement," made and entered
into on this day of August 2008, by and between the City of Lodi, a municipal corporation,
hereinafter referred to as "Client," and The Reed Group, Inc., hereinafter referred to as
"Consultant."
WITNESSETH:
WHEREAS, Client is proceeding with the development of a water utility financial planning model
that requires the services of a consultant;
WHEREAS, Consultant has available and offers to provide personnel and facilities necessary to
accomplish such work as may be requested by Client;
WHEREAS, Consultant acicnowledges that it is qualified to perform the scope of services required
under this Agreement.
NOW, THEREFORE, Client and Consultant agree as follows:
DESCRIPTION OF PROJECT
Services provided shall be as described in written task orders made pursuant to and referencing this
Agreement, but in general shall include financial planning and rate setting services.
II. SCOPE OF SERVICES
Consultant agrees to perform those services described in separate written task orders signed by
Client and Consultant. Unless modified in writing by both parties, duties of Consultant shall not be
construed to exceed those services specifically described in each task order.
III. TIME FOR COMPLETION
The time for coinpletion of work shall be as identified in each task order issued pursuant to this
Agreement.
IV. COMPENSATION
For services to be performed by Consultant, as described in each task order, Client agrees to pay,
and Consultant agrees to accept, conipensation as identified in each task order. Consultant shall
invoice Client on a time and materials cost basis for services provided under this Agreement in
accordance with the Billing Rate Schedule contained in Exhibit A unless task orders specifically
indicate otherwise.
K:\WP\UTILITY RATES\MASTER PROFESSONALSERVICES AGREEMENT_ReedGroup doe 07/10/2008
Consultant shall submit monthly invoices for services as prescribed in each task order. Client shall
pay such invoices within 30 days after their receipt. If payment is not made within 30 days, interest
on the unpaid balance will accrue at a rate of one (1) percent per month compounded monthly.
V. RESPONSIBILITY OF CONSULTANT
Consultant agrees that in undertaking the duties to be performed hereunder, it shall act as an
independent consultant for and on behalf of Client. Client shall not direct the work and means for
accomplishment of the services and work to be performed hereunder. Client, however, retains the
right to require that work performed by Consultant meet specific standards without regard to the
maiuler and means of accomplishment thereof
VI. INDEMNIFICATION
To the fullest extent permitted by law, Consultant shall indemnify and hold harmless Client, their
directors, officers, and employees from and against claims, damages, losses, and expenses
(including reasonable attorneys' fees), arising out of performance of the work, provided that any
such claim, damage, loss, or expense is caused by negligent acts or omissions of Consultant, any
subconsultaiit employed directly by Consultant, anyone directly or indirectly employed by any of
them, or anyone for whose acts they may be liable.
VII. INSURANCE
Consultant shall procure and maintain the following insurance policies, each of which shall provide
primary coverage with respect to work performed under this Agreement.
1, Coinpreheiisive General Liability Insurance. Insurance including premises/operations,
products/completed operations, blanket contractual, and broad-forin property damage
liability coverages. The combined single limit for bodily injury and property damage
shall not be less than $2,000,000 per occurrence, and $2,000,000 per year in
aggregate.
2. Automobile Bodily Injury and Property Damage Liability. Insurance covering owned
(if any), lion -owned, rented, and leased cars. The limit shall not be less than
$2,000,000 per occurrence.
3. Workers' Compensation and Eniployer's Liability. Insurance as prescribed by
applicable law, including liability under the Longshoreman's and Harbor Workers'
Act and the Jones Act, if applicable. The employer's liability limit shall not be less
than $2,000,000.
4. Professional Liability Insurance. Insurance covering losses resulting from errors or
omissions of the Consultant. The limit of liability shall not be less than $2,000,000
per claim and in the aggregate.
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VIII. ASSIGNMENT
This Agreement is binding on the heirs, successors, and assigns of the parties hereto. This
Agreement may not be assigned by either Client or Consultant without the prior written consent of
the other.
IX. BENEFIT
Except as herein provided, this Agreement shall inure to the benefit of the assigns, heirs, and
successors of the parties to this Agreement,
X. TERMINATION
Client may terminate this Agreement for its convenience. Consultant shall be compensated for work
performed to the date of termination including a reasonable amount for profit and cost to terminate
work.
In the event Consultant shall persistently fail to perform services and work hereunder in a manner
satisfactory to Client, this Agreement inay, at Client's option, be terminated. Consultant shall be
coinpensated for completed and useful work performed to the date of termination.
XI. JURISDICTIONAND ATTORNEYS' FEES
This Agreement shall be administered and interpreted under the laws of the State of California.
Jurisdiction of litigation arising from this Agreement shall be venued with the San Joaquin County
Superior Court. If any part of this Agreement is found to conflict with applicable laws, such part
shall be inoperative, null, and void insofar as it is in conflict with said laws, but the remainder of
this Agreement shall be in full force and effect.
117 the event any dispute between the parties arises under or regarding this Agreement, the prevailing
party in any litigation of the dispute, including arbitration proceedings, shall be entitled to
reasonable attorney's fees from the party who does not prevail as determined by the San Joaquin
County Superior Court or an arbitrator designated under the Construction Industry Arbitration
Rules of the American Arbitration Association.
XII. ARBITRATION
All claims, disputes, and other matters in question between the parties to this Agreement arising out
of or relating to this Agreement or the breach thereof, which are not disposed of by mutual
agreement, shall be decided by arbitration in accordance with the Construction Industry Arbitration
Rules of the American Arbitration Association. No arbitration arising out of or relating to this
Agreement shall include any person not a party to this Agreement except by written consent signed
by the parties hereto and persons to be joined. This agreement to arbitrate shall be specifically
enforceable under prevailing arbitration law.
Notice of demand for arbitration shall be filed in writing with the other parties to this Agreement
and with the American Arbitration Association. The demand shall be made within a reasonable
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time after the claim, dispute, or other matter in question has arisen, but in no event after the date
when the institution of legal or equitable proceedings would be barred by the applicable statute of
limitations. The award rendered by the arbitrators shall be final, and judgment may be entered in
accordance with applicable law in any court having jurisdiction.
XIII. LIABILITY LIMITATION PROVISION
Should Consultant or any of its officers, employees, or agents be found to have been negligent in
the performing of professional services or work, or to have breached any express or implied
warranty, breached any representation or any provision of this Agreement, Client, all persons or
entities claiming through Client and all persons or entities claiming to have in any way relied upon
or been damaged by Consultant's services or work agree that the maximum aggregate amount of
the liability of Consultant, its officers, employees and agents shall be limited to the total amount of
the fee paid to Consultant by Client for its work performed with respect to the project, or
$1,000,000 whichever is greater. The Agreement price is predicated on this limitation of liability.
Should Client object to this provision, then the Agreement price will be renegotiated by Coiisultant
and Client to account for the increase in Consultant's potential liability. Any objection by Client to
this limitation on liability must be conveyed to Consultant before Client's acceptance of this
Agreement.
XIV. INTEGRATION
This Agreement represents the entire understanding of Client and Consultant as to those matters
contained herein. No prior oral or written understanding shall be of any force or effect with respect
to those matters covered hereunder. This Agreement may not be modified or altered except in
writing, signed by both parties.
XV. SUBCONTRACTS
Except with prior written approval of Client, Coiisultant shall not enter into any subcontract with
any other party for purposes of providing any work or services covered by this Agreement.
XVI. OWNERSHIP OF DOCUMENTS
All documents, photographs, reports, analyses, audits, computer media, or other material
documents or data, and working papers, whether or not in final form, which have been obtained or
prepared under this Agreement, shall be deemed the property of Client. Upon Client's request,
Consultant shall allow Client to inspect all such documents during Consultant's regular business
hours. Upon termination or completion of services under this Agreement, all information collected,
work product and documents shall be delivered by Consultant to Client within ten (10) calendar
days. Client agrees to indemnify, defend and hold Consultant harmless from any liability resulting
from Client's use of such documents for any purpose other than the purpose for which they were
intended.
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XVII. AUTHORITY
The undersigned hereby represents and warrant that they are authorized by the parties they purport
to represent to execute this Agreement.
THE REED GROUP, INC.
Signature
Printed Name
Title
Date
Attest:
Randi Johl
City Clerk
Attaclunent —Exhibit A
S
K MMUTILITY RATESWASTER FROFESSONAL SERVICES AGREEMENT_ReedGroup doc
CITY OF LODI
Signature
Blair King
City Manager
Date
Approved as to form
Janice D. Magdich
Deputy City Attorney
07/10/2008
THF, RF-1�n GRoup, INC.
June 11,2008
Mr. F. Wally Sandelin
City cf Lodi
221 West Pine Street
P.O. Box 3006
Lodi, CA 95241-1910
Subject: Proposal for Water Utility Financial Planning, Rate Setting, and
Meter Implementation Program
Dear Mr. Sandelin:
The Reed Group, Inc. (TRGI), in conjunction with Lucy & Company, is pleased to submit this
proposal to provide professional services for financial planning and rate setting assistance for
the City's water utility and the development of the water meter implementation program. Our
proposal has been prepared based on information obtained during our meetings with you on
these subjects. The meter implementation program is intended to assist the City in meeting the
requirements of Assembly Bill No. 2572 (AB 2572).
TRGI is a Sacramento -based consulting firm providing financial and management consulting
services to municipal water/ wastewater utilities throughout California. We have extensive
experience in long-range financial planning for water/wastewater utilities, as well as cost cf
service analyses and rate setting. Lucy & Company is a Sacramento -based public relations firm
providing research, education, and outreach services to public agencies throughout the
Sacramento/San Joaquin region. Jointly, TRGI and Lucy & Company have assisted more
agencies with meter implementation programs in the region than any other firm.
As you review our proposal we believe that you will find TRGI and Lucy & Company uniquely
qualified to assist the City in this study because we provide:
Unique metering experience in th a Sacramento region. TRGI and Lucy & Company have
unparalleled experience in planning and implementing water meter retrofit programs in
the Sacrainento region. Local metering clients of TRGI and/or Lucy & Company have
included the City cf West Sacramento, City of Roseville, City of Sacramento, Sacramento
County, City of Folsom, Saxe Juan Water District, Fair Oaks Water District, Carmichael
Water District, and Sacramento Suburban Water District.
A research and experience -based approach to public outreach. Lucy & Company has
developed an approach to metering public outreach that combines research to gauge the
3053 Freeport Boulevard #158 • Sacramento, CA 95818-4346 9 (916) 444-9622. x-%nvw.TheReedGroup org
MP.. F. WALLY SANDELIN
JUNE 11,2008
PAGE 2
pulse of the community, as well as experience from working on this issue in other
communities. Each community will have unique issues and concerns, which we will
identify through focus groups and a community meeting. However, through our
experience with other communities we will identify issue early and develop a proactive
and strategic public outreach plan for the City.
Local knowledge and experience. Consultants for TRGI and Lucy & Company have
performed multiple projects in Stockton, Lathrop, Manteca, and Galt are generally
familiar with many issues in San Joaquin County
• Value orientation, TRGI's mission is to provide each client with a high level of service
and unparalleled responsiveness. We do not impose a predetermined formula on our
client's problems. We take the time to recognize the unique aspects of each client's
situation, and to develop solutions to address their needs. The cost of providing this
higher level of service is usually competitive with other firms. In addition, we strive to
be long-term partners with our clients and serve as on ongoing resource on utility issues.
This is evidenced by the many clients that we have worked with for ten or more years.
Our worl< plan and cost estimate are based on our understanding of the project stemming from
discussions with you and other City staff. We are prepared to proceed with the project as
described herein. Additional discussions regarding our specific approach to the project may be
warranted. We welcome the opportunity to discuss these with you.
If you have any questions regarding our proposal, please call me at (916) 444-9622. Thank you
for this opportunity to provide this proposal to the City. We look forward to working with you
on this project.
Sincerely,
OZ44 V�->
Robert Reed
The Reed Group, Inc.
CITY OF LODI
Water Utility Financial Planning,
Rate Setting, and Meter
Implementation Program
PROPOSAL
June 11,2008
k
THE REED GROUP, INC.
CITY OF LODI
I. INTRODUCTION
PROPOSAL FOR WATER METER
IMPLEMENTATION PROGRAM
The Reed Group, Inc. (TRGI), in conjunction with Lucy & Company, is pleased to submit this
Proposal to the City of Lodi (City) to provide professional services for water system financial
plaruling and rate setting and the development cf the water meter implementation program.
Our Proposal is submitted in response to your request and our meetings in recent months.
The City is seeking the services of experienced consultants to assist in evaluating a variety of
financial issues, including capital improvement program needs, and in developing the City's
water meter implementation program. Beyond the technical and financial analyses, this
engagement will involve gauging the pulse of the community with respect to metering issues,
and developing a public outreach and education strategy to help ensure the successful
implementation of the program. Therefore, the City needs consultants that not only have the
requisite financial and rate setting knowledge, but also the sensitivity and public awareness
skills to effectively develop strategies and present policy issues to the City Council and public.
We propose to approach this important project in a manner consistent with your needs and
expectations.
TRGI is a Sacramento -based management consulting firm specializing in water and wastewater
rates and fees, financial planning, operational analyses, and general management consulting.
TRGI has performed more water meter implementation planning studies within the Sacramento
region than any other firm.
Joining our project team will be the public relations firm of Lucy & Company. Lucy &
Company is a public relations and strategic communications firm specializing in public
outreach, community involvement and process facilitation. Founded in 1995, Lucy & Company
has established a reputation as a premier practitioner in regional water, wastewater,
transportation and land use issues. TRGI and Lucy & Company have worked jointly on several
water meter implementation programs.
Our proposal has been prepared based on our understanding of the project and the current
situation, as well as our experience gained from performing similar studies in the region.
II. FIRM QUALIFICATIONS
This section of the Proposal provides a brief description of our firms, including history, types of
services provided, and experience in developing water meter implementation programs.
Information about the project consultants, including background and responsibility during the
project, is also provided.
A. TheReed Group, Inc.
The Reed Group, Iiic. (TRGI) is a Sacramento -based firm that provides a broad range of
financial and management consulting services to local governments primarily in the areas of
water and wastewater utility finance and management. The mission C TRGI is to provide
clients with an exceptional level of service and responsiveness, to develop creative yet practical
THE REED GROUP, INC. PAGE 1
PROPOSAL FOR WATER METER
CITY OF LODI IMPLEMENTATIONPROGRAM
solutions to client needs, and to broaden understanding and facilitate consensus on complex
issues.
TRGI provides services in the areas of water and wastewater rate studies, cost of service
analyses, capacity charge nexus studies, multi-year financial planning, conservation planning,
policy analysis and development, public participation and facilitation, and litigation support
and expert witness services. The firm brings the following strengths to client engagements:
• Extensive California experience in water and wastewater utility operations,
management, and finance.
• Broad knowledge of traditional practices and innovative techniques in water and
wastewater rates, fees, and cost of service analyses.
• Familiarity with legal and regulatory requirements affecting public agency operations,
management, and finance.
• Leadership in developing public participation and consensus -oriented approaches to
rate and fee setting, particularly with metering and metered water rate issues,
• A network of resources and an ability to coordinate and manage multi -disciplinary
project teams on broad ranging engagements.
A listing of clients and projects is presented in Appendix A of this proposal. Specific experience
related to development of metering programs, including metered water rates, are described
below.
City of Roseville -Meter Retrofit Program and Rate Studies
In 2000, The Reed Group, Inc. assisted the City of Roseville with the development of a water
meter retrofit program. The project included an assessment of the need for water meters,
development of the cost and schedule for retrofit meter installations, development of a financial
strategy for paying for the program, recommendations of a metered water rate structure, public
outreach research, and development of a public outreach program. In 2001, The Reed Group,
Inc. conducted as supplemental study to develop metered water rates and assist with the
beginnings of the transition to metered water rates. The meter retrofit program project included
focus groups research and a series of workshops with a citizen advisory committee. Lucy &
Company served as a subcontractor to The Reed Group, Inc. on this project for the City of
Roseville. Mr. Reed has worked with the City of Roseville on a number of other water,
wastewater, solid waste, and storm water projects. All projects have included presentations to
the City's Public Utilities Commission and City Council.
City of West Sacrainento -Meter RetrofitPrograrn and financial Planning/Rate Studit
In 2005, Mr. Reed has assisted the City of West Sacramento develop a multi-year financial plan
and update its water rates. This work was done in conjunction with the update of the City's
water master plan, which included initial steps to identify water meter needs. In 2007, The
Reed Group, Inc., with the assistance of Lucy & Company, developed a comprehensive water
meter implementation program including conducting public awareness research, developing a
public outreach plan, and developing metered water rates for residential customers. The City's
metering program was designed to meet the requirements of AB 514.
THE REED GROUP, INC. PAGE 2
PROPOSAL FOR WATER METER
CITY OF LODI IMPLEMENTATIONPROGRAM
City of Sacramento -Metered WaterRates
The Reed Group, Inc. is currently assisting the City of Sacramento to develop and implement
metered water rates for its residential customers. The City of Sacramento is facing the same
requirements for installing water meters as the City cf Lodi. Customers within the City that
have water meters will need to be billed based on actual water usage beginning in January 2010.
The development of metered water rates includes assessing the City's non-residential water
rates, considering the balance between fixed and water usage based revenues relative to costs,
equity, and rate simplicity. New metered water rates may be considered by the City Council in
late 2008.
Carmichael WaterDistrict - WaterRate Studies
Mr. Reed has been a consultant to the Carmichael Water District since 1997. Mr. Reed assisted
the District is establishing a citizen advisory committee to perform a comprehensive water rate
study. At the outset of the study, the District's general manager advised us that we could not
talk about the "M" word (meter). We indicated that could not conduct a water rate study if we
could not talk about water usage. After about 15 workshops, the citizen advisory committee
unanimously recommended that the District aggressively pursue the metering of all services.
Carmichael Water District then became one cf the leaders in the Sacramento region in installing
retrofit meters on previously unmetered service connections.
Since the original rate study, Mr. Reed has assisted the District with several water rate updates
and connection fee calculations. In 2003, TRGI worked with an engineering firm to develop a
water master plan and financial business plan for the District. While the original rate study and
subsequent rate updates included five-year financial plans, the financial business plan included
a full life -cycle analysis of the District's water system facilities and addressed long-term
replacement and rehabilitation needs.
Some of the District's water rate updates involved adopting double digit rate increases. Mr.
Reed assisted the District in presenting rate recommendations during rate hearings, at times
including 200 people in the audience. Because the District has established an open process for
dealing with controversial issues it has enjoyed growing community support.
San Tuan Water District -Retail and Wholesale WaterRate Studies
Mr. Reed has performed numerous wholesale and retail financial plan and water rate studies
for the San Juan Water District. In 2000, The Reed Group, Inc. completed a retail water rate and
financial plaiuling study for the District. That project included working with a citizen advisory
committee to evaluate and develop metered water rates as the District was nearing the
completion of its meter retrofit program. Since that time the District has successfully
transitioned all custoiners to metered water rates. In 2006, The Reed Group, Inc. performed an
update to the retail financial plan and water rate study, including a comprehensive analysis cf
water usage now that all customers are on metered rates.
Fair Oaks Water District -Metering hnblementation Plan
I n 1998, The Reed Group, Inc. performed the first comprehensive metering implementation plan
in the Sacramento region. The project included a detailed technical evaluation of the
THE REED GROW, INC. PAGE 3
PROPOSAL FOR WATER METER
CITY OF LODI IMPLEMENTATION PROGRAM
requirements for water metering (number of meters, types of installations, cost estimates, and
staffing/ time requirements), financial planning (funding strategy, multi-year financial plan,
cash flow analysis of conversion from flat to metered rates), and public outreach and education
(market research, public outreach plan, and development of materials). The project included
workshops with the District's board of directors, as well as several community meetings. Lucy
& Company was a subcontractor to The Reed Group, Inc. on this landmark project.
B. Lucy & Company
Lucy & Company is a public relations and strategic communications firm specializing in public
outreach, community involvement and process facilitation. Founded in 1995, Lucy & Company
has established a reputation as a premier practitioner in regional water, wastewater,
transportation and land use issues.
Unequaled experience, proven ability, in-depth knowledge and a passion for what we do - these
qualities make Lucy & Company unique. We have developed and implemented hundreds of
public outreach programs throughout the greater Sacramento and Central Valley regions. Our
creative and effective campaigns have received dozens of awards from industry organizations,
including the International Association of Business Communicators, Sacramento Advertising
Club and Sacramento Public Relations Association.
Water purveyors and cities alike consider Lucy & Company as specialists in water metering
outreach. Since metering was federally mandated, Lucy & Company has implemented
successful outreach strategies to assist water agencies in all phases of the program, from
research through implementation. Outreach includes effective print materials and Web sites as
well as media relations conducted by a creative team who is knowledgeable in the areas, with
advisors from the Lucy & Company staff who have deep experience in metering outreach.
Our clients are represented by a talented, full-service team that is dedicated to personal service.
Our experienced professionals repeatedly go beyond the role of project manager or tactician to
function as a strategic, creative team that turns "ordinary" programs into successful campaigns
that achieve results. Reliable and friendly clientseivice is a top priority with the entire Lucy &
Company team.
Strategic, creative, committed and effective — that's Lucy & Company.
Specific water metering outreach experience, and other local experience, of Lucy & Company is
summarized below.
Sacramento County Water.Agency
To keep the County's water customers informed about the federally -mandated metered rates
program, Lucy & Company developed and implemented a public outreach plan to proactively
target specific communities with information applicable to their service area. Activities included
strategic support for community presentations, coordination of public meetings and the
development of customer outreach materials. Additionally, Lucy & Company developed and
launched the County's first-ever customer newsletter.
THE REED GROUP, INC. PAGE 4
PROPOSAL FOR WATER METER
CITY OF Lom IMPLEMENTATIONPROGRAM
Cite of Sacramento
Lucy & Company has completed the research phase cf the metering implementation plan for
the City of Sacramento Department cf Utilities. Research tactics included plaruling and
coordinating all aspects of a statistically -valid telephone survey as well as four focus groups.
Drawing on the research findings, Lucy & Company has prepared an implementation plan to
work with the department on transitioning Sacramento from flat to metered rates over the next
20 years. Additionally, Lucy & Company has conducted initial public outreach for this
program, including development of pages for the department's Web site and a regularly
updated hotline.
Fair Oaks WaterDistrict
Lucy & Company worked with a financial consultant and engineering firm to develop a five-
year comprehensive metering implementation plan that addressed all potential metering issues.
To develop the public outreach plan, Lucy & Company conducted research, which included
phone interviews and an internal staff and materials audit. Primary research consisted of focus
groups with community leaders and residents. As part of the program, Lucy & Company
facilitated a series of customer advisory workshops to obtain community feedback about the
District's metering implementation plan, held rate increase public workshops, provided media
relations support, created newsletters, developed a new district Web site and established a new
District identity package.
Cite of Roseville
In Roseville, the city turned to Lucy & Compaiiy to navigate the stormy waters cf implementing
metered water service. Through focus group research, the establishment and guidance cf a
citizen's advisory committee and community workshops, Lucy & Company zeroed in on the
public's toy concerns about meter installation and offered recommendations for addressing
them. The most contentious issue was the $750 unit cost of installing water meters in homes
built prior to 1992 (since homes after'92 were already paying the cost in their loan payments).
Other significant concerns included fear cf higher bills with metered rates, concern about
adequate notification and outreach as the program unfolded and the disruption to property
during meter installation.
Under the direction of Lucy & Company, the City obtained feedback from the public on all
components of a comprehensive metering implementation plan, which included phasing cf
meter installation, public notification methods and messages, how the cost of meter iiwtallation
should be distributed and an equitable metered rate structure.
The result was a comprehensive document that included a strategic public outreach plan,
engineering and rate analysis and recommendations based on customer input and feedback.
The City Council adopted the metering implementation plan with very few changes and
implementation has progressed smoothly.
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PROPOSAL FOR WATER METER
CITY OF LODI IMPLEMENTATION PROGRAM
San Tuan Water District
In 1999, Lucy & Coinpany conducted scientifically valid research of San Juan Water District's
customers. One major finding was that customers felt they were lacking adequate information
about metered rate implementation. The research also revealed widespread concern about the
impact of metered rates on residential water bills, with 60 percent of all respondents very or
somewhat concerned, and 50 percent of all respondents expecting higher bills once metered.
As a result of these findings, Lucy & Company developed a four-year strategic approach to
commurdcating with customers about water meters. Utilizing tactics such as a customer rate
resource committee, bill inserts, brochures, Web sites and newsletters, the District has provided
customers with various and frequent updates about metered rate implementation in the
ensuing years, San Juan Water District transitioned its customers smoothly to metered, well
before the target date, with a number of customers voluntarily switching early in the process.
C. Project Team
Our proposed project team is summarized in the organization chart below. A summary of the
qualifications and experience of each consultant are also presented below. Resumes for each
consultant are included in Appendix B of this proposal.
City of Lodi
Water Meter Implementation Program
Project Team
City of Codi
The Reed Group
Robert Reed
> Project Manager
> Financial Analysis
> Metered Rates
Lucy & Company
Lucy Eidam
Kim Floyd
> Focus Group Research
> Stakeholder Interviews
> Outreach Plan Devel.
Proiect Manager -Robert Reed
Robert Reed, President of TRGI, brings 25 years of experience initially as an engineer for a major
water/ wastewater agency and, for the past 18 years, as a management consultant to local
governments. He has provided a diverse range of services to more than 100 clients.
Approximately two-thirds of the engagements have been for clients for whom Mr. Reed has
THE REED GROUP, INC. PAGE 6
PROPOSAL FOR WATER METER
CITY OF LODI DMPLEMENTATIONPROGRAM
provided inultiple services. He has led metering projects for the City of West Sacramento, City
of Roseville, City of Folsom, Fair Oaks Water District, and Carmichael Water Districts. He has
also performed several metered water rate and related studies for the San Juan Water District,
Sacramento Suburban Water District, and other local utilities. He is also currently working with
the City of Sacramento on developing metered water rates for residential customers.
Mr. Reed will serve as project manager for the water meter implementation program project for
the City cf Lodi, and will be responsible for all aspects of the project. He will personally
perform the analytical aspects of the project (financial plamling and water rate development)
and will oversee the work of Lucy & Company. In addition, he will participate in all
community meetings, focus groups, and presentations to the City Council.
Luce Eidani
Lucy has more than 20 years of experience as a communications professional skilled in all
phases of strategic development and program supervision. As president, Lucy manages the 10 -
person organization, providing strategic direction for the firm's clients. She provides insight
and guidance to ensure that program components meet overall project goals. In addition to
critical thinking, Lucy has a flair for developing creative and innovative campaigns that deliver
results.
A trained meeting facilitator, Lucy applies her professional and effective facilitation skills at
public meetings and workshops, strategic planning sessions and creative concept meetings. She
has particular interest and expertise in process facilitation, bringing together diverse groups
and interests to help them work toward consensus -based decisions. She has done this work for
varied groups including the Regional Water Authority, the first Regional Cooperative Water
Efficiency Plan and the Sacramento Mayors and Board Chair Forum.
Responsible for management of a growing, woman -owned public relations firm specializing in
water recycling, wastewater and water public outreach and involvement programs. Lucy's
strategic and creative methods result in many successful, multi -faceted campaigns, which
include public opinion research, public meetings, stakeholder outreach and targeted media
relations.
Khv Floy
Kiln has nearly 14 years of experience as a communications professional skilled in all aspects of
public outreach, strategic communication planning and community relations. With background
in both the public and private sectors, Kim understands issues from "both sides cf the aisle,"
bringing valuable insight to Lucy & Company and its clients.
Kiin's solid technical knowledge is invaluable in directing targeted outreach programs for
multi-million dollar infrastructure projects. She leads the firm's research and stakeholder
outreach programs, and expertly guides clients through project development and
implementation.
As client services manager, Kim is responsible for managing diverse projects ranging from one-
time deliverables to comprehensive, multi-year public outreach programs. She helps clients
plan effective outreach strategies and choose appropriate tactics to deliver key messages. These
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PROPOSAL FOR WATER METER
IMPLEMENTATION PROGRAM
tactics include community meetings, stakeholder outreach, newsletters, Web sites, media
relations, advertising and special events.
III. REFERENCES
The Reed Group, Inc. and Lucy & Company offer the following references on metering projects.
We encourage you to contact our references and to inquire on how we meet the unique needs of
each project and client. Of course, the City already has direct experience in working with The
Reed Group, Inc. during the recent water master plan update.
The Reed Group, Inc.
City of West Sacramento - Water Meter Implementation Program
Michael Bessette, Associate Civil Engineer
916-617-4665
City of Roseville - Water Meter Retrofit Program
Derrick Whitehead, Director of Environmental Utilities
916-774-5770
San Juan Water District - Wholesale and Retail Water Rate Studies
Shauna Lorance, General Manager
916-791-6936
Lucy & Companit
Sacramento County Water Agency - Meter Retrofit Public Outreach Program
Diane Margetts, Communications and Media Officer
916-874-4517
City of Sacramento - Metering Implementation Community Relations Research
Jessica Hess, Department of Utilities, Public Information Officer
916-808-8260
City of Roseville - Water Meter Retrofit Program -Public Outreach Plan
Derrick Whitehead, Director of Environmental Utilities
916-774-5770
San Juan Water District - Water Meter Outreach Research, Development & Implementation
Shauna Lorance, General Manager
916-791-6936
IV. DESCRIPTION OF PROPOSED SERVICES
This section describes the services to be provided during water meter implementation program
project. It includes a discussion of our recommended approach for the project, and a detailed
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PROPOSAL FOR WATER METER
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work plan of tasks. Our goal is to meet the City's objectives by providing a high level cf service
in a cost effective and efficient manner.
A. Situation Analysis
A few years ago, the City of Lodi established a special charge appearing on the water bill to
provide funds for cleanup of groundwater contaminated with PCE and TCE. At the same time,
the City is seeking a settlement with parties involved with the contamination. While the
cleanup effort may take 40 years, the City wants to review current and projected costs and
revenues associated with the issue and verify that the previously developed financial strategy is
adequate or adjust it to meet objectives.
In addition, the City is planning for the construction cf a new water treatment plant (around
2014), and also examining the current and long-term needs for water system rehabilitation and
upgrade. The City would like to explore the financial implications of various scenarios and use
this information to develop a sound financial strategy for addressing each issue.
Assembly Bill No. 2572 (AB 2572) became law in 2004 and requires urban water suppliers to
install water meters on all water services not previously metered by January 1, 2025. It also
requires all water service conriections with a water meter to be billed based on water usage no
later than January 1,2010.
The city of Lodi is moving forward with a water meter implementation program pursuant to
AB 2572. The City must complete the installation of and read about 4,000 meters by January 1,
2010; all remaining connections must be metered and read by January 1,2025. To date, the City
has installed 400 meters through a pilot program and has plans to install 600 more in a
subsequent phase. All metered connections continue to be billed on a flat rate.
There is an estimated 17,000 to 18,000 water meter installations that need to be completed as
part of the water meter implementation program.
In order to assess and plan for future obligations of the water utility as well as successfully
implement the water meter implementation program the City needs to:
• Develop a multi-year financial planning model capable of evaluating a variety of
scenarios and financial strategies. In addition to examining the financial aspects of
PCE/TCE cleanup efforts, construction of a new water treatment plant, and water
system rehabilitation and upgrade needs, the model will be used to assess the financial
implications of the metering program, as well as ongoing operations, debt obligations,
and the overall capital improvement program for the City's water utility.
• Identify the number and type of water meter installations that will need to be completed
both by 2010 and by 2025. This plan, including cost estimates and timeline are being
developed by City staff.
• Evaluate and develop a metered water rate structure and develop a transition strategy to
implement metered rates.
• Conduct research on public understanding and opinions regarding the requirement to
install water meters and to bill customers for water service based on metered usage.
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PROPOSAL FOR WATER METER
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• Develop and implement a public outreach and education program to inform customers
about the metering requirements, installation of meters, and transition to metered water
rates.
• Identify policy issues related to the metering program and other water utility issues.
The Reed Group, hic., in association with Lucy & Company, proposes to assist the City with
each of the foregoing activities, and to help guide City staff and the City Council with the
myriad of issues to be addressed as the program is developed and implemented.
B. Sunnnay of StudyApproach
The development of the water meter implementation program will involve the integration of
several types of services, each requiring a different set of skills. Key to the success of thus
project will be the ability of the project manager to coordinate the work of each project team
member and ensure that the various elements are woven together in a complete and
comprehensive manner.
The success cf this project will also hinge on open and honest communications with residents
and businesses within the community. We have found that the greatest obstacle to metering or
other large projects is often a fear of the unknown. When customers do not understand the
issues, do not know their own water use characteristics, and do not recognize the potential
benefits of metering there is a tendency to resist change. The resistance can be vocal, political,
and entrenched. However, metering can proceed smoothly if the program is developed and
implemented in an open manner; one that provides opportunity for input and is responsive to
concerns of the community, By taking a proactive and strategic approach, the City can enhance
its public relations with its customers. Our proactive approach includes research to gauge the
pulse of the community as we develop specific implementation recoininendations. Public
outreach objectives of this project include:
• Increase customers' knowledge and understanding about the state legislation mandating
meter installations
• Communicate and address potential issues of concern in a straight -forward Manner,
either in written communications or prepared statements, to both English and non-
English speaking customers
• Repeatedly provide new and timely information about metering through various
coinmuiucation materials and methods
• Drive traffic to the City of Lodi's web site, or other identified source, for more
information about water meters
• Help City staff to educate the public by providing information about the program to
customers, elected officials, business and community leaders, and other stakeholders.
C. Work Plan
Our work plan is intended to meet the City's objectives for this project and is structured based
on the scope of work discussed with the City in recent months. Deliverables associated with
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each task are identified, and the table following the task descriptions summarizes the estimated
consultant hours associated with each task and sub -task.
Task 1 - Financial Planning and Water Rate 5ettiu
This study will include developing a multi-year financial plaiuling model to evaluate the
current and estimated future financial condition cf the water utility. The financial plan will
then be used to (1)assess the financial implications cf a variety of long-range planning and
capital improvement program issues, (2) evaluate the metering program, as well as other
planned capital improvement projects, (3)identify the annual water rate revenue requirements,
and (4) consider financial policies and other actions to help mitigate future water rate increases.
This task will also include calculating water rates, including new metered water rates for
residential customers, and developing a transition strategy for converting flat rate customers to
metered rates. Task Twill be comprised of four sub -tasks. They include:
1.1 Financial Plan Development - A multi-year financial plan will be developed for the
City's water utility consistent with the time frame used for long-term planning. The
financial plan will consider operating and maintenance costs, current and future
debt obligations, and capital program needs. The primary purpose of the financial
plan will be to determine annual water rate revenue requirements (to be used for
rate setting). However, the plan will also be used to consider financial policies,
identify when the City may need to issue new long-term debt for capital projects
(e.g., water treatment plant), and evaluate the impacts of new debt obligations.
Various aspects of the water meter implementation program may affect the financial
plan. This could include (1)capital program costs and schedule associated with
installing water meters on existing water service connections, (2) transition to
metered rate billing for residential customers, (3) implementation of public outreach
plan recommendations, (4) operational changes associated with the metering
program, including meter reading, utility billing, and meter replacement. During
this project, we will monitor the potential financial implications cf all aspects of the
water meter implementation program.
Deliverables: Memorandum to staff Pdthupdated financial plan exhibits
2 Scenario Development and Analysis - The financial planning model will provide a
valuable tool for analyzing various financial issues. Working with City staff, we will
identify, define, and model up to four scenarios for financial analysis. Scenarios will
include evaluating the current and projected revenues and expenses related to the
PCE/TCE cleanup effort, evaluating the implications cf water system rehabilitation
and upgrade projects, timeline, and funding, and evaluating the impacts of the
planned water treatment plant. The analyses will include developing financial
strategies for each scenario with the intention cf minimizing future water rate
increases.
Deliverables: Memorandum sunmiarizing financial plan scenarios, assumptions,
findings, andfinancial strategies.
1.3 Water Rate Calculations - This sub -task will include development of
recommendations regarding metered water rates for residential customers, as well as
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PROPOSAL FOR WATER METER
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a general update of the City's other water rates. Annual revenue needs will be
determined using the financial plan model. Water rate calculations will include cost
of service analyses and rate design to develop rate structures that provide needed
revenues, are equitable to customers, and meet other City objectives. We will meet
with staff to discuss the various rate structure alternatives available to the City, as
well as their advantages and disadvantages. In particular, we will address (1)the
requirements for implementing conservation -oriented rate structures, (2) financial
stability, and (3) affordability of water service. A decision on rate structure
recommendations will also reflect information obtained from public outreach
research activities. We will then develop metered water rate schedules based on a
proposed rate structure. Calculations will be based on available data and
information, and revenue requirements contained in the multi-year financial plan.
Deliverables: Waterrate SUMMary report with 5 -year rate schedules and transition
sh,ategy
4 Metered Rate Transition StrateRy - The City is required to begin billing on metered
water rates by January 1, 2010 for all customers with water meters. The task will
include developing a metered rate transition strategy and timetable. The transition
strategy will consider existing customers with and without water meters, as well as
new connections occurring as new development occurs.
The transition to metered billing of residential customers can begin once meters are
installed and meter reading activities begin. At present, several hundred water
meters are already in place (and a few thousand simple need meters dropped into
existing boxes). In addition, all new construction includes meters. Once meter
reading activities are initiated the transition to metered billing can also begin.
We recommend that the transition strategy include a multi -prong approach. Of
course, we will revise our recommendations based on community outreach research
as well as input from staff. However, the metered billing transition strategy should
consider:
• Iimnediate metered billing for all new service connections
• Voluntary metered billing for all existing customers that have meters and
believe they would benefit from metered billing (i.e., have lower bills)
• 12 -months of water use history and comparative bills provided before any
residential customer is required to be on metered rates
• Statutory deadlines for converting customer to metered rates.
Availability of water conservation assistance programs to help custoiners
reduce their water usage.
In developing the metered billing transition strategy for the City we expect to work
closely with multiple departments of the City (e.g., public works, finance, City
manager's office, etc.)
Deliverahles: Metered billing transition strategy (to be included in metered rate
summary report - sub -task 1.2)
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PROPOSAL FOR WATER METER
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Task 2 - Public Outreach
The goal cf this task is to educate customers about the water meter implementation process by
executing a proactive, strategic public outreach program designed to increase customer
knowledge about water meters and what a metering program means to the City Lodi, the meter
installation process, and potential rate increases and financial impacts to customers.
Lucy & Company, in conjunction with The Reed Group, will develop a research and experience -
based public outreach approach, creating the most positive and successful meter
implementation program possible. Phase I research, as proposed below, will provide the
foundation for a comprehensive public outreach program strategy. Possible components of such
a program have been highlighted for reference purposes in Phase II. A complete
implementation schedule and task strategy will be prepared upon thorough analysis of research
findings.
2.1 Focus Group Research - In this sub -task Lucy & Company will recruit focus groups
which generate qualitative data allowing for the exploration of issues in greater
detail than quantitative studies. Focus groups are often used to uncover information
about particular issues or topics where little is known and to confirm or refute
assumptions. They can be used as a starting point for future research or to unearth
issues that require further study. Focus groups help identify the "pulse" of a
particular community or group for the following reasons:
• Focus groups are less structured than quantitative studies, allowing for the
introduction of new angles and perspectives — rather than forcing a
participant to select from predetermined rating scales or categories.
• The dynamics of a focus group environment often lend value-added elements
— focus groups can take on an educational quality in which participants
inform one another about the issues at hand.
• The "open response" format provides an opportunity to obtain large and rich
amounts of data in the respondents' own words, helping clarify important
key messaging opportunities.
• Participants can react to and build upon the responses of other group
members, increasing opportunities for enhanced understanding.
The city of Lodi's Water Metering Implementation Program focus groups will touch
on the following areas, each having critical importance to public outreach planning:
Is the general public aware of the water metering concept?
• What definition of metering makes sense to a layperson?
• What are the prevailing attitudes about the concept?
What relevant points should be made to address the key concerns expressed
by the general public and stakeholders as the project moves forward?
• What opportunities and challenges will likely arise during program
implementation?
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PROPOSAL FOR WATER METER
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To evaluate attitudes about metering, a demographically -relevant mix of community
members will be randomly recruited to participate in one of three focus groups. The
strategic recruiting process better ensures the groups accurately reflect the
demographic composition of the community, resulting in a more pristine,
meaningful outcome.
Lucy & Company will: develop needs, expectations and questions in partnership
with the project team; coordinate development of recruitment screener and
moderator's guide; moderate two focus groups; facilitate transcription services and
develop a comprehensive research report for use in determining tactics for strategic
public outreach plan.
Focus Group Metlzodology
• Each focus group of 10 people (maximum) will last for two hours.
Participants will be randomly recruited to ensure fair representation of all
community member groups.
Participants will be provided a light diruler and paid $60 each for their time
and input.
Deliverables: Focus group research report sunzni.arizing findings
2.2 Stakeholder Interviews - One-on-one interviews would be the most effective means
of soliciting feedback from and gauging opinions and attitudes of business,
community and other key opinion leaders. Lucy & Company would schedule and
conduct up to 10 interviews, either in-person or via telephone, with key opinion
leaders. These representatives would be identified in partnership with the City.
Deliverables: Stakeholder Interview Synopsis
2.3 Public Outreach Plan Development - Based on input from focus groups and
stakeholder interviews, Lucy & Company will work with the City to develop a
strategic public outreach plan to guide the meter installation and rate transition
program throughout 2013. The plan will provide an overall guide for activities and
will include evaluation milestones and key messages to ensure goals and objectives
are met. The plan will also include recommendations for an implementation phase
of the public outreach program (as described below).
Deliverables: Public outreach plan
2.4 Public Outreach Implementation (Phase II) - Most of the metering program's first
four months will be dedicated to Phase I research and planning. The remainder of
the time will be spent on Phase II outreach implementation. Below are suggested
activities; however, a detailed scope and cost estimate will be presented as part of
the public outreach plan in Phase I based on research findings.
Stakeholder Database - Develop and maintain comprehensive stakeholder database
to include water services customers, city staff, elected officials and other public
opinion leaders,
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Itey Messages - Develop key messages to serve as the foundation cf the Metering
Implementation Outreach Campaign. A key message consists cf one brief
positioning statement along with two to three supporting statements that are used to
address a particular topic. The key messages will be incorporated into all
communications inaterials to ensure that all city representatives are sharing
consistent messages and speaking with one voice.
Outreach Materials - The team will prepare a suite cf outreach materials and
develop design standards, topic lists and other information which will be included
in all future metering communication pieces. Examples of potential outreach
materials include:
• Official letter printed on city letterhead and envelope
• Direct mail postcards or newsletters
• Metering brochure/ Frequently Asked Questions (FAQ)
• Door hangers (notice of meter installation)
Media Relations - Working with the media to ensure customers are receiving
messages about metering through a variety of avenues will help diminish any major
opposition later down the road.
Web Site - Develop a Web page that incorporates information about water metering
and its implications for the city of Lodi, as well as general FAQs about the meter
installation process.
Stakeholder Outreach - Work with local organizations to place information about
the metering program in community publications and resources. Examples include
neighborhood association publications, chamber newsletters, applicable Web sites,
etc.
Community Meetings - In order to reach both the general public and opinion
leaders, Lucy & Company recommends a two -fold approach to community
meetings:
1. Presentations to the City Council
2. Presentations to community organizations, neigl-tborhood associations and civic
groups.
Hotline Number - Establish a "24/7' hotline to provide Lodi residents with a single
number for information about the metering program.
Graphic Identify - Establish and standardize graphics to utilize when
cominunicating information about the metering implementation program.
Task 3 - Proiect Management/Coordination
This task includes various project management and coordination activities, as well as other
activities not covered in other tasks.
3.1 Meetings with Staff - Our Project Manager, and other consultant staff, as
appropriate, will be available to meet with City staff throughout the project. We
anticipate the need for a number of formal meetings with staff from various City
departments to address issues such as meter reading, metered billing, etc. Other
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PROPOSALFOR WATER METER
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meetings may be required to coordinate with the City's project manager, and to plan
various aspects of the project
Delivembles: Meeting agendas
3.2 Proiect Management - Our Project Manager, Bob Reed, will be responsible for
managing and coordinating the activities of the project team throughout the
engagement. Mr. Reed will be the primary point of contact with the City and have
overall responsibility for the project. Immediately upon receiving a notice to
proceed, we will schedule a kick-off meeting between project team members and
appropriate City staff. At that time, we will review the project scope, approach, and
schedule, and coordinate initial activities.
In addition, each month we will prepare and submit via e-mail monthly invoices to
the City's project manager.
Deliverables: Monthly invoices
3.3 "Shirt Sleeve" Studv Sessions - The City Council conducts weekly study sessions
where council members can devote time to specific issues. Because of the variety
and complexity of issues to be addressed during this project, it is proposed that a
series of study sessions be conducted with the Council to address the financial
planning, water rate, and metering program issues to be covered by the study.
These study sessions would provide the opportunity for early input to the study as
well as a chance to become fully familiar with the many complex and interrelated
issues that will impact the water utility for years to come. While the specific
schedule and agenda for these study sessions will be determined as the study
progresses, this sub -task allows for up to five study sessions with the City Council.
Delivembles: Study Session materials
3.4 Presentation of Recommendations - Final study conclusions and recommendations
will need to be presented to the City Council for consideration and approval. We
propose to attend and make formal presentations during two City Council meetings.
The first meeting would occur once recommendations are finalized and would
precede the start of the public hearing notice process required to approve new water
rates. The second presentation to the City Council would occur in conjunction with
a public hearing to adopt new water rates. In particular, we propose to present
recommendations regarding (1)metered water rate structure, (2) transition strategy
from flat to metered rates, (3) and public outreach plan to inform and educate
customers.
Delivembles: Presentation materials
D. Additional Services
We have prepared our work plan in accordance with our understanding of the project. Every
proposed engagement work plan is limited in its scope due to factors such as the availability of
information, the client's definition of tasks, limited familiarity with issues, etc. As the water
meter implementation program project proceeds, the City may wish its consultants to perform
additional tasks not currently planned. We take pride in our ability to adapt our work plan to
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PROPOSAL FOR WATER METER
CITY OF LODI 11\4PLEMENTATION PROGRAM
accommodate each client's needs, often without adjustments to project budget or schedule. We
will work closely with the staff to ensure the project proceeds according to plan. However,
should the City desire additional assistance or services, not now contemplated, we would be
pleased to address your needs. Potential areas cf additional assistance include:
• Conduct a workshop with City staff, City Council members, and/or interested citizens
on the pros and cons of alternative water rate structures for residential customers. This
would precede detailed metered water rate calculations.
• Conduct community meetings to inform the community about the metering program.
• Assist with customer notification of meter installation just prior to construction.
• Other tasks as identified during the study.
V. PROJECT BUDGET AND SCHEDULE
The table below summarizes the estimated cost for the water meter implementation program
project. The cost estimate includes estimated hours and expenses for each task. The detail is
provided for information purposes. We are committed to providing the services as described
herein for a not -to -exceed limit of $114,670, including expenses. While the costs associated with
individual tasks may vary from those shown in the table, the entire project would be performed
within the contract ceiling.
City of Lodi
Water Utility Financial Planning, Rate Setting, and Meter Implementation Program
It is our practice to bill clients for actual costs, subject to the not -to -exceed budget, on a monthly
basis. All payments are due within 30 days. Our cost estimate is valid for 90 days and is based
on the project schedule, as described below. Our cost estimate is based on the comprehensive
scope are described herein. If only select tasks are selected, the individual cost of tasks may
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PROPOSAL FOR WATER METER
CITY OF LODI IMPLEMENTATION PROGRAM
change. Cost estimates also are based on designers maintaining ownership of printer files and
electronic working files. The City may purchase these ownership rights for art additional
charge. Hourly billing rates and other charges are subject to adjustment in January of each year.
The tiineline below is consistent with a 6 -month schedule to perform financial and rate setting
tasks and to develop a public outreach plan. Implementation of the public outreach plan (phase
2) would begin after completion of phase 1. Our schedule assumes that the City awards a
contract June, with work to begiruiing in early July. Because of the nature and scope of this
project both the consultant and staff must bear responsibility in keeping the project on schedule.
Estimates of the timing of each task, as well as of major milestones in the project, are depicted in
the schedule below.
City of Lodi
Water Utility Financial Planning, Rate Setting, and Meter Implementation Program
_ ProjectS_chedule _ _
IJuly _ 4_Ag ustISe tS p ember October ]_November Decemb
1. Financial Planning and Rate Setting
Financial Plan Development
Scenario Development& Analysis
Water Rate Calculations
Metered Rate Transition Strategy
2. Public Outreach
Focus Group Research
Stakeholder Interviews
Public Outreach Plan Development
Phase it - Implementation
3. Project Mgmt/Coordination
Team Meetings
Project Management
"Shirt Sleeve" Study Sessions
Presentation of Recommendations
We will review the schedule with staff during the kick-off meeting. In particular, we will
review a schedule and topics for each planned study session to be held with the City Council.
Many of the project tasks and sub -tasks can proceed in parallel, although some activities will
need to follow a logical sequencing.
THE REED GROUP, INC. PAGE 18
crry OF LORI
PROPOSAL FOR WATER METER
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APPENDIX A - THE REED GROUP, INC. - CLIENT LISTING
THE REED GROUP, INC. PAGE 19
CITY OF LODI
PROPOSAL FOR WATER METER
IMPLEMENTATION PROGRAM
Partial Listing of Water/Wastewater Clients
Phe Reed Group, Inc. Projeds*
kmador Water Agency
3ear Crk. Vly. San. Auth., OR
"ity ofCalistoga
.".ityofCamarillo
'armichael Water District
-ontra Costa Water District
'ity of Dana Point
'ity of Del Mar
'ityofDixon
)ixon-Solano Muni. Wtr. Srvc,
)ublin San Ramon Serv. Dist.
,ast Bey Mimic. Utility Dist.
Jty of East Palo Alto
I Dorado Irrigation Dist.
air Oaks Water District
Sty of Folsom
'ity of Galt
'ity of Hanford
'ityofLathrop
,os Angeles DWP
Ity of Manteca
4arin Municipal Water Dist.
Resa Consolidated Wtr. Dist.
'ity of Morgan Hill
dipomo CSD
dorthridge Water District
'ity ofOceanside
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1: Some moiects were performed by Robert Reed prior
to establishing The Reed
Group, Inc.
THE REED GROUP, INC. PAGE 20
CITY OF LODI
PROPOSAL FOR WATER METER
IMPLEMENTATION PROGRAM
APPENDIX B - CONSULTANT RESUMES
THE REED GROW, INC. PAGE 21
PROPOSAL FOR WATER METER
(IIY OF LODI IMPLEMENTATIONPROGRAM
ROBERT REED THEREED GROUP, INC.
Mr. Reed is President of The Reed Group, Inc. (TRGI). He has over 20 years of experience
providing a broad range of financial and management consulting services to local governments
in the areas of water and wastewater utility management, as well as public works and
engineering functions. The mission of TRGI is to provide clients with an exceptional level of
service and responsiveness, to develop creative yet practical solutions to client needs, and to
broaden understanding and facilitate consensus on complex issues. Areas of specialty include:
Utility RatelTee Studies - water, wastewater, stormwater, and solid waste cost of service and
rate design studies; wholesale and retail rates; marginal cost pricing; community-based rate
setting methodologies
WaterMeter Retrofit Implementation - plarming, development, and implementation of meter
retrofit programs including technical evaluation of metering options, cost analysis and
scheduling, financial planning and funding strategies, transition from flat to metered rate
structures, rate structure analysis, and public outreach and education
Capital Facility Financing Studies - evaluation of the economic and financial feasibility of
capital improvement programs; capital facility financial planning; development impact fee and
capacity charge studies
Kesources Management - financial reserve policy analysis; water conservation planning;
drought impact studies; urban water management plan preparation; water rate conservation
incentives; water supply yield and water availability studies.
Litigation Support - litigation support, including expert witness testimony in matters related to
water and wastewater rates and charges including Proposition 218; provided technical support
during SWRCB water rights proceedings.
Representative Protects
City of Roseville, (since 1999) - In 2000, Mr. Reed assisted the City of Roseville with the developinent cf
a water meter retrofit program. The project included financial analyses, public outreach and
education, and development cf metered water rates. During the study we conducted several focus
group workshops, and worked with a citizen advisoiy committee to develop plan recommendations.
Plan recommendations were presented to the Public Utilities Commission and City Council. Since
that time Mr. Reed has continued to work with the City on a variety of water, sewer, stormwater, and
solid waste issues.
•3 City of Folsom, (since 2999) - Assisted the Public Works Department with the development of a meter
retrofit program and water rate structure study, The meter implementationprogram included public
outreach, multi-year financial plara-dng, and rate analyses. Mr. Reed also performed a wastewater
and solid waste rate and fee study for the City. Each project also included extensive involvement
with the City's Utility Advisoiy Committee, and presentations to the City Council.
Fair Oaks WaferDistrict (since 1998) - Comprehensive water rate study. Assisted staff and the Board
of Directors in considering a broad range cf water rate and fee issues. In 1999, Mr. Reed led a study
to develop a Metering Implementation Plan for the District. TI -ds study includes the technical
THE REED GROUP, INC. PAGE 22
CITY OF LODI
PROPOSAL FOR WATIR METER
IMPLEMENTATION PROGRAM
evaluation of meter installation issues, development of a multi-year financial plan to determine how
to pay for and finance meter installations, and assessment of needed public outreach and education
activities. Mr. Reed assisted the District in refunding existing long-term debt to take advantage of
low interest rates. We also explored the availability and suitability of low-interest SRF loans for the
metering program. A detailed 15-yearf riancial plan was developed as part of this project.
Carmichael Water District, CA (since 1997) - Water rate study and 5 -year financial plan. Conducted 10
workshops with an 11 -member citizens advisory committee (including 2 Board members). Focus of
study was on cost of service issues and rate design with a transition from flat to metered rates. The
District's largest customers were represented on the committee. Mr. Reed has continued to assist the
District with water rate and financial plan updates, as well as litigation support services. He also
assisted the District in successfully rebutting a legal challenge to the District's water rates on
Proposition 218 grounds.
San Juan Water District (since 2000) - Assisted the San Juan Water District with several water rate and
financial planning studies at both the retail and wholesale levels. In 2005, Mr. Reed is assisting with
an update to the District's retail financial plan and water rates. Mr. Reed is also updating the
District's retail connection fees as part of this study.
Solano Irrigation District (since 1998) - Water rate and financial plan studies. Assisted the District in
three separate studies to address policy issues related to rate structures, revenue strategies, financial
policies, and long-range financial planning. Separate studies were performed for the Dixon-Solano
Municipal Water Service (joint water system with City of Dixon), the Suisun-Solano Water Authority
(joint water system with the City of Suisun City), and SID'S General Fund. Public workshops have
been conducted with elected officials and the public in each study. In 2000, Mr. Reed served as
Project Manager on a classification, compensation, and organization study for the District. The study
included interviews with about one-half of the staff throughout the organization and focused on
organizational structure issues to improve operational effectiveness. A compensation survey was
performed to compare the District with its labor market, and job descriptions were updated to reflect
the work performed for each of about 40 staff positions.
Sacramento Suburban Water District, CA (1996 -present) - Mr. Reed is currently working with the
Sacramento Suburban Water District on preparing an update to their capital improvement plan,
multi-year financial plan, and water rates. Mr. Reed worked with the predecessor Northridge Water
District on to develop two previous five-year water rate plans and FDC calculations. He also
developed recommendations on wheeling charges whereby other entities could wheel water through
the District's transmission facilities. Mr. Reed also assisted the Arcade Water District (also a
predecessor to SSWD) in working with their Irrigation Task Force and developing an alternative
conservation -oriented water rate structure for public agency irrigation customers.
City cf Sacramento - Assisted the Utilities Department on several small projects, including assessment
of residential flat water rates, update to water system connection fees, and evaluation of potential
annexation of a portion ofSSWD's service area into the City's water utility service area.
City of Lathrop (since 1993) - Assisted the City to develop comprehensive capital facilities fee
(development impact fee) program for the City including facilities related to storm drainage, water,
sewer, transportation, municipal facilities, parks, and conununity facilities. Also performed several
di ity rate studies and worked with financing team on the issuance of long-term debt for water
system improvements.
THE REED GROUP, INC. PAGE 23
PROPOSAL FOR WATER METER
CITY OF LODI IMPLEMENTATION PROGRAM
• Contra Costa Water District, CA (since 2996) - Wholesale (raw) water rate structure study affecting the
District's municipal and industrial customers. Working with a Technical Advisory Conunittee
(TAC), we developed reconunendations for modifying the water rate structure to better achieve
District objectives. Also provided litigation support or expert witness assistance in litigation on the
District's Facilities Reserve Charges (similar to SDCs).
•;• City cf Santa Rosa, CA (since 1998) -- Water and wastewater rate study. Performed a water and
wastewater rate study for the City of Santa Rosa's retail operations. The study included detailed cost
cf service analyses, refinement of current rate structures, developnient of a five-year financial plan,
and review of financial policies and practices. During the study we performed two day -long
workshops with City staff to explore rate and financial issues in detail. Staff found these workshops
to be extremely beneficial in understanding and developing consensus on various issues. Mr. Reed
also performed studies pertaining to water shortage rates, water conservation incentives embodied in
rate structures, and financial reserve policies.
Education
B. S. Tngineering, University of California, Los Angeles, 3982
M.S., Water Resources Engineering, University of California, Davis, 1990
M.B.A, Public Policy and Management, University of California, Davis, 1990
Licensed Civil Engineer in California (Lic. No. 41064)
Professional Background
East Bay Municipal Utility District, Water Resources Plam-dng, 1983-1988
Ernst & Young, Governmental Consulting Practice, 1990-1992
David M. Griffith & Associates, Utility Consulting Practice, 1992-1996
Hilton Farnl<opf & Hobson, Water/ Wastewater Practice, 1996-1998
Reed Consulting Group, Owner, 1998-2000
The Reed Group, Inc., President, 2001 -present
THE REED GROUP, INC. PAGE 24
PROPOSAL FOR WATER METER
CITY OF LODI IMPLEMENTATION PROGRAM
LUCY EIDAM
Principal, Lucy & Company
Lucy has more than 20 years cf experience as a communications professional skilled in all
phases of strategic development and program supervision. As president, Lucy manages the 10 -
person organization, providing strategic direction for the firm's clients. She provides insight
and guidance to ensure that program components meet project goals. In addition to critical
thinking, Lucy has a flair for developing creative and innovative campaigns that deliver results.
A trained meeting facilitator, Lucy applies her professional and effective facilitation skills at
public meetings and workshops, strategic plarming sessions and creative concept meetings. She
has particular interest and expertise in process facilitation, bringing together diverse groups
and interests to help them work toward consensus -based decisions. She has done thus work for
varied groups including the Regional Water Authority, the first Regional Cooperative Water
Efficiency Plan and the Sacramento Mayors and Board Chair Forum.
Responsible for managing a growing, woman -owned public relations firm specializing in water
recycling, wastewater and water public outreach and involvement programs. Lucy's strategic
and creative methods result in many successful, multi -faceted campaigns, which include public
opinion research, public meetings, stakeholder outreach and targeted media relations.
Representative Clients
♦ Sacrainento Regional County Sanitation District (SRCSD)
♦ Yolo County Water Resources Association
♦ Sacramento County Water Agency
4 City of Sacramento, Elk Grove and West Sacramento
t San Juan Water District
EDUCATION
University of Oregon, Eugene - Bachelor of Science, Rhetoric and Communications, 1987
University of California, Davis - Continuing Education in Water Resources Planning,
Meeting Facilitation and Public Relations
University Associates, San Diego - Advanced Facilitation Training, 2001
AWARDS/COMMUNITY INVOLVEMENT/AFFILIATIONS
4 Public Relations Professional of the Year, 2000, Sacramento Public Relations Association
Board of Directors President, California International Marathon
♦ YVateReuse Association - member
♦ Association of California Water Agencies - member
4 Sacramento Area Water Works Association - inember
♦ California Water Awareness Campaign - inember
t Water Education Foundation - inember
THE REED GROUP, INC. PAGE 25
CITY OF LODI
KIM FLOYD
PROPOSAL FOR WATER METER
IMPLEMENTATION PROGRAM
Client Services Manager, Lucy & Company
Kim has nearly 14 years of experience as a communications professional skilled in all aspects of
public outreach, strategic communication planning and community relations. With background in
both the public and private sectors, Khn understands issues from "both sides of the aisle," bringing
valuable insight to Lucy & Company and its clients.
Kiln's solid technical knowledge is invaluable in directing targeted outreach programs for multi-
million dollar infrastructure projects. She leads the firm's research and stakeholder outreach
programs, and expertly guides clients through project development and implementation.
As client services manager, Kim is responsible for managing diverse projects ranging from one-
time deliverables to comprehensive, multi-year public outreach programs. She helps clients
plan effective outreach strategies and choose appropriate tactics to deliver key messages. These
tactics include community meetings, stakeholder outreach, newsletters, Web sites, media
relations, advertising and special events.
Representative Clients
City of Stockton Municipal Utility Department - Delta Water Supply Project
♦ City of Stockton Department of Community Development - Process Improvement Project
(completed September 2007)
City of Sacramento Department of Utilities - Customer Satisfaction Research (completed
January 2008)
Sacrainento Area Sewer District (formerly CSD -1) - Fats, Oils and Grease
♦ West Sacramento Flood Control Agency
♦ Three Rivers Levee Improvement Authority
4 Department of Water Resources - Floodplain Mapping/ Lower Sacramento Basin
Past Experience
Prior to joining Lucy & Company, Kim served as the manager of government and corporate
communications for one of the nation's largest electric utility cooperatives. In that role, she was
responsible for developing and managing a public outreach strategy to gain community
support for the siting and construction of new energy generation facilities, including a $250
million clean coal plant and a $100 million natural gas plant. She was also responsible for
monitoring and negotiating planning and land use policies and regulations. In that capacity, she
successfully represented the utility's interests in dealings with local municipalities and
goveriiinent agencies, elected officials, key stakeholders and members of the public.
Kim also spent six years as a public information specialist in Alaska's second-largest K-12
public school system, during which tiine she successfully led three major school bond
campaigns and facilitated hundreds of public meetings on issues as diverse as budget cuts,
boundary changes and privatization of district operations. In addition, she developed a
THE REED GROUP, INC. PAGE 26
PROPOSAL FOR WATER METER
CITY OF LODI IMPLEMENTATION PROGRAM
partnership program with the community's major residential developers, which resulted in the
gifting of land to the district for future school sites. She also spearheaded communication efforts
for six consecutive contract bargaining efforts. Kim began her career as an account executive at
a large Sacramento -based public relations firm where she worked on water, transportation and
special land use projects. Kim grew up in Stockton and is a graduate of Tokay High School and
University of the Pacific.
Awards/Community Involvement/Affiliations
Kim is active in many business, community and civic organizations. She is certified in the
Incident Command System (ICS) and has served as a PIO on a county emergency response
team. Kim recently edited WORDSMITHING: The Art & C�c-itt of Writing for Public Relations, a
textbook published by Pearson and used in public relations programs in colleges and
universities throughout the United States. Other activities include:
♦ Sacramento Metro Chamber Cap -to -Cap Flood Protection Committee - member
f Rotary International - member
♦ Public Relations Society of America - member
Education
4 University of the Pacific, Stockton - Bachelor of Arts, Cum Laude, Communications and
Public Relations, 1994
♦ Outstanding Communications Senior
4 Outstanding Public Relations Senior
4 Mortarboard Honor Society -Member
THE REED GROUP, INC. PAGE 27
RESOLUTION NO. 2008-160
A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING
THE CITY MANAGER TO EXECUTE MASTER AGREEMENT
AND TASK ORDER NO. 1 OF WATER UTILITY FINANCIAL
PLANNING, RATE SETTING, AND METER INSTALLATION
PROGRAMAND FURTHER APPROPRIATING FUNDS
WHEREAS, Assembly Bill 2572 mandates that usage -based residential water billing
begin by January 1, 2010, for customers with water meters; and
WHEREAS, assistance is required in order to meet the usage -based billing deadline
for the 2,472 customers that have purchased water meters since 1992; and
WHEREAS, staff recommends the services of The Reed Company be retained to
facilitate introduction of a usage -based water rate.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby
authorize the City Manager to execute a Master Agreement and Task Order No. 1 of the Water
Utility Financial Planning, Rate Setting, and Meter Installation Program in the amount of
approximately $74,670 with The Reed Group, Inc., of Sacramento, California; and
BE IT FURTHER RESOLVED that funds in the amount of $85,000 be appropriated
from Water Capital funds for this project.
Dated: August 6, 2008
---------------------------
hereby certify that Resolution No. 2008-160 was passed and adopted by the City
Council of the City of Lodi in a regular meeting held August 6, 2008, by the following vote:
AYES: COUNCIL MEMBERS— Hansen, Hitchcock, Johnson, Katzakian, and
Mayor Mounce
NOES: COUNCIL MEMBERS— None
ABSENT: COUNCIL MEMBERS— None
ABSTAIN: COUNCIL MEMBERS — None
2008-160
Water Utility Financial Model
August 6, 2008
Assembly Bill 2572
■ Billing for water based upon usage needs to
begin January 1, 2010 (1 year of grace allowed
to cities like Lodi — January 1, 2011)
■ 2,866 new homes constructed since 1992 are
affected by the law
■ Installation of these meters complete in 2008
■ Have begun installing meters on all new
services
Financial Model Uses
■ Develop usage -based water rates
■ Analyze tiered water rate structure
■ Balance expenditures for infrastructure
replacement and groundwater cleanup
■ Assess impacts of an Accelerated Meter
Installation Program
■ Capital Improvement/Replacement
Program
Policy Direction
■How long a period is acceptable for dual
rate schedules — flat rate and usage -base
rate
■What should be the reimbursement for
City -installed meter facilities
■What is the customer cost share for a new
meter assembly and related plumbing
■How long a period should we provide
comparative rate information to customers
Costs
1. The Reed Group - Financials $75,000
2. Lucy Company — Public Outreach $40,000
3. Staff Costs $10,000
Total $125,000
Schedule
Kick Off
Preliminary Model
Policy Direction by Council
Preliminary Results
Final Direction
August
September
September
November
December